The Insider: Ensuring insurance

I’m slightly surprised that the idea of bundling motor insurance together with vehicle leasing is growing, even though it has a certain logic.

It was always my understanding that fleet motor insurance was the poor relation when it came to company insurances, and that professional indemnity, buildings, and employer’s liability were subsidising motor. Historically the number of insurers wanting to deal with fleet was reducing, yet now, even the likes of Moneysupermarket.com are offering fleet insurance. On that basis it seems surprising that anyone would want to take on motor risk solely. Perhaps I should be looking at it the other way around – that the motor insurers working with the leasing companies are hoping to gain additional business from other areas.

However, collectively Britain’s insurers made a profit on motor in 2014 for the first time in around 20 years, which they attribute to a fall in fraudulent claims, although there was also suggestion that the profits were partly due to a different way of treating reserves, which might come back to bite them later.

But if the sector is in profit, perhaps that is why bundling insurance is suddenly on the increase. Or, with a rising increase in the number of salary sacrifice schemes, where insurance forms part of the product, perhaps the industry is saying “why not?” across fleet in general. For years we nagged our leasing providers to deliver enhanced services and now they are offering just that.

The Americans have been bundling insurance with leasing for years and have taken the idea a step further. In an effort to curb end of lease damage costs – and this is to business fleets, not just retail customers – you can add the delightfully named ding-and-dent product alongside gap insurance and cover for wheels and tyres. Maybe the next big thing will be affordable grey fleet insurance, purchased by the company, rather than the employee.

Ever the pessimist, and inclined to cynicism – which incidentally I attribute to too many years working in fleet – if I were outsourcing fleet insurance to a lease company, I’d want pretty stringent controls in place to ensure the pot of money relating to insurance premium was paid to the insurer and not inadvertently overlooked, leaving us without cover.

Given the sophistication and ability of our top leasing companies, I think that’s unlikely. Conversely, in an outsourced situation, knowing motor insurance was bundled with the rest of the fleet administration would be quite reassuring. Once again, the requirement for retaining a knowledgeable person in house to oversee the fleet function is clear.

As it is, our company requires all those other insurances anyway, and unless the alternative motor premium was sufficiently less, we would stay put. But it will be interesting to see the size of the premiums, and whether the insurer directly manages claims, or if accident management companies are still utilised.

Talking about fraudulent claims, which I was further up the page, we are currently being hit with just one such incident. Now obviously I can’t go into too much detail but the incident was so innocuous that our driver – who had a car full of children to shield from what turned into a slightly ugly situation – didn’t report it at the time. That has come back to bite us later, with claims from the third party for vehicle damage (clearly visible as pre-existing on their car at the time), and multiple personal injury sums, meaning the insurance reserve is massive. Two months on, it’s difficult to obtain independent medical reports and the like. So all I would say is, do encourage your drivers to report ALL incidents immediately, however trivial they appear at the time, and however much of a nuisance the subsequent paperwork and detail.